Mike Novogratz says a CNBC segment on buying a bitcoin rival shows why regulators are clamping down on crypto

Mike Novogratz poked a little fun at CNBC while speaking with its rival Bloomberg about the crypto hype that marked the beginning of 2018.

“CNBC, not to pick on CNBC, but I think I can since I am here,” Novogratz said.

He said a segment about buying Ripple’s XRP epitomized the “peak nonsense” of the bitcoin mania that swept financial media and markets.

Mike Novogratz, the famed hedge funder turned cryptocurrency enthusiast, poked a little fun at a segment on the financial-news network CNBC when describing to its rival Bloomberg News the crypto hype that marked the start of 2018.

“CNBC, not to pick on CNBC, but I think I can since I am here, they literally had a show where they were one by one walking people through how to buy the Ripple, the XRP coin, literally when it was trading at $3.20 having moved from $0.20 eight weeks earlier,” Novogratz said, speaking with Bloomberg’s Erik Schatzker.

Novogratz said that was “peak nonsense.”

Ripple’s XRP, a bitcoin rival, was technically trading above $2.57 when CNBC broke down how to buy it on the exchange operator Poloniex on January 5. Still, the crypto market was red-hot then, with the market racing toward an all-time-high market capitalization above $830 billion, according to CoinMarketCap. XRP ultimately fell to $0.49 on April 5.

The second half of 2017 also saw the rise of so-called initial coin offerings, a quick way to raise funds using cryptocurrency. Many of these fundraisers were promoted by celebrities such as Paris Hilton and Floyd Mayweather Jr.

Novogratz said this phenomenon may be the reason regulators started to clamp down in 2018. But it is something Novogratz, who is building out a crypto merchant bank, thinks is a positive sign for the market.

“So we are going to knock out some of the crap from the system,” he said. “It is healthy.”

Notably, the Securities and Exchange Commission hit multiple cryptocurrency companies with subpoenas. It also recently promoted Valerie Szczepanik to lead its new cryptocurrency enforcement unit. The New York Attorney General’s Office earlier this year launched an inquiry into cryptocurrency exchanges.

The question now hanging over the space is whether regulators will deem crypto assets as securities, which would require entities that facilitate crypto trading to subscribe to a whole range of regulations.

“I bet dimes to doughnuts [regulators] will say, ‘Ethereum probably was a security, but it is not anymore,'” Novogratz said.

Novogratz said there were about 200 tokens in regulatory “no-man’s land.”

Jay Clayton, the head of the Securities and Exchange Commission, didn’t provide additional clarity during an interview Wednesday with CNBC.

“I’m not going to comment on specific crypto assets and whether they are a security or are not a security,” Clayton told CNBC’s Bob Pisani.